When the U.S. government seizes Bitcoin or another cryptocurrency, it takes control of the asset while forfeiture proceedings continue; seizure alone does not make the forfeiture final. The Department of Justice’s general policy is to secure the cryptocurrency in government-controlled wallets and keep it in the form seized until a final forfeiture order or final administrative forfeiture. What happens after that depends on the case, the law and the asset involved.
Seizure, custody and forfeiture are different stages
A seizure places cryptocurrency in government custody. It is not, by itself, a final decision that the government may permanently keep or dispose of it. The asset may remain in custody while the forfeiture process proceeds, or it may ultimately be returned, forfeited and disposed of, or handled in a way that supports authorized victim compensation.
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The DOJ’s Asset Forfeiture Policy Manual 2025 and its Justice Manual guidance, updated January 2026, describe the general federal policy. They do not guarantee that every agency or case will follow an identical custody path.
How the government takes and stores cryptocurrency
How the asset is held affects how it is seized
DOJ guidance distinguishes between cryptocurrency held in a wallet controlled by its owner and cryptocurrency held through a service provider:
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- Self-custodied wallet in the United States: DOJ guidance calls for a seizure warrant for cryptocurrency possessed and controlled by the owner, served on the owner or the owner’s counsel.
- U.S.-based virtual asset service provider: If an exchange or other provider holds the cryptocurrency, the agency should obtain and serve a warrant on that provider.
- Foreign-located provider: DOJ directs prosecutors to consult the Office of International Affairs. Obtaining the asset may require mutual legal assistance or similar legal authority.
Initial storage and possible transfer
Before a transfer to the U.S. Marshals Service (USMS) or a USMS contractor, the seizing agency must have a government-controlled self-custodial or cold-storage wallet for temporary storage. DOJ says each cryptocurrency type should be kept in its own wallet; an agency may use one or more wallets for a seizure.
The agency processes the asset through its forfeiture department and assigns it a Consolidated Asset Tracking System (CATS) identification number. If USMS or its contractor can support the cryptocurrency, the agency may transfer it to a receiving wallet for pre-forfeiture storage under current USMS procedures. The handoff is conditional: DOJ advises agencies to consult USMS during seizure planning because it may not be able to store or liquidate every type of cryptocurrency.
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Is seized Bitcoin sold immediately?
Generally, no. DOJ policy says cryptocurrency should remain in the form seized and should not be liquidated—converted into cash or another cryptocurrency—until a final order of forfeiture is entered or administrative forfeiture becomes final. The manual explains that an early conversion could expose the government to price fluctuations and create responsibility for making an owner whole if the asset must be returned.
The manual recognizes limited circumstances in which prosecutors may seek an interlocutory sale or pretrial conversion. They must consult the Money Laundering and Asset Recovery Section (MLARS) before seeking an interlocutory sale order. The manual identifies requests or consent from all parties with an ownership interest, and certain cases involving victims’ pecuniary losses, as circumstances in which a sale order may be sought. These are exceptions to the general policy, not an assurance that a sale will occur.
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What happens if forfeiture becomes final?
For covered property in its custody that is subject to forfeiture or has been forfeited under laws enforced by DOJ and certain other federal agencies by agreement, USMS has primary authority for management and disposal. Cryptocurrency liquidation must follow the written policies of both the seizing agency and USMS.
The applicable sources do not establish one sale channel, timetable or price for every cryptocurrency. The asset’s technical characteristics, the agency’s written policies and the final case outcome all matter.
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Anonymity-enhanced cryptocurrencies have additional restrictions
For anonymity-enhanced cryptocurrencies (AECs), DOJ says law enforcement should keep the assets in agency self-custodial or cold-storage wallets until further notice from USMS. Prosecutors should seek guidance from MLARS or USMS about disposition. MLARS must approve requests to sell AECs or place them into official use. This is a distinct handling rule; it should not be assumed that the process for Bitcoin applies to every token.
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Whether an owner can recover seized cryptocurrency, and any deadline for making a claim, depends on the particular proceeding and applicable law. The DOJ sources do not establish a universal deadline. Anyone affected should check the actual forfeiture notice and court filings and consult a qualified lawyer about the case.
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Victim compensation is possible when federal law authorizes it, but it is not automatic and does not give every victim a claim to a particular cryptocurrency asset. The DOJ explains the program in its Asset Forfeiture Program overview and its FAQ on compensating victims with forfeited assets. Whether compensation is available depends on the case and governing law.
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